The present invention generally relates to financing structures/architectures associated with municipal bond financing methods that may improve ratings on municipal bonds issued in connection with the construction or renovation of consistently high demand, high revenue-producing municipal assets such as, for example, energy plants, water and sewer facilities, toll roads, bridges, bus and train systems, parking lots and garages, parking meters, airport cargo and passenger terminals and seaports (herein, a “Municipal Facility” or “Municipal Facilities”) and thereby increase the cost effectiveness of any financing of such Municipal Facilities.
Conventionally, in facilities revenue bond financings, bonds issued to finance the construction or renovation of Municipal Facilities have been supported by the credit of the consolidated balance sheet of a municipality, joint powers authority or other municipally-created entity having jurisdiction or oversight over such Municipal Facilities (herein, a “Municipal Entity”). Such bonds are referred to as Consolidated Balance Sheet Municipal Bonds or “CBSMBs”. Sometimes the Municipal Entity whose consolidated balance sheet is evaluated to determine the credit rating on debt issued to finance specific Municipal Facilities may be far less creditworthy than the Municipal Facilities themselves on a stand-alone basis, or the Municipal Entity may be unable to timely repay various debt obligations due to economic problems, or the Municipal Entity may even have filed for bankruptcy protection. Rather than being forced to sell such stand-alone, strong revenue producing Municipal Facilities to one or more private companies to obtain much needed cash, the Municipal Entity may elect to use the technique described herein to raise capital without an outright sale of such Municipal Facilities to the private sector.